Lehman seeks $3 billion from CIBC, others in lawsuits

By Chelsea Emery and Jonathan Stempel

3 Min Read

<p>People walk past the Lehman Brothers headquarters in New York September in this September 16, 2008 file photo.Chip East/Files</p>

NEW YORK (Reuters) - Lehman Brothers Holdings Inc, which filed for bankruptcy exactly two years ago, has sued Canadian Imperial Bank of Commerce and dozens of other defendants to recover more than $3 billion of which it said it was deprived due to the bankruptcy filing.

The lawsuits contend that the defendants were allowed unfairly to have their claims vault ahead of Lehman's own.

"Equity and good conscience dictate" otherwise, Lehman said in court papers.

Lehman sought Chapter 11 protection on September 15, 2008, hurt by a decline in real estate values and a financial crisis caused by lack of liquidity.

In a statement, it said it brought Tuesday's lawsuits to beat a two-year deadline to file fraudulent transfer cases.

The company asked Judge James Peck, who oversees the bankruptcy, to put the lawsuits on hold indefinitely should it try to settle.

Success would help Lehman repay creditors owed more than $600 billion, including unsecured creditors that Lehman has said might have to wait years to recoup just 10.4 cents to 44.2 cents on the dollar.

Lehman already has sued Barclays Plc to undo an alleged $11 billion "windfall" tied to the British bank's purchase of its U.S. brokerage, and JPMorgan Chase & Co to recover $8.6 billion it said was extracted just before the bankruptcy.

In Tuesday's lawsuits, Lehman contended it had contracts that gave it senior payment priority on various derivatives and collateralized debt obligations, but that the bankruptcy caused this to be improperly replaced with junior payment priority.

It said CIBC is responsible for a "significant portion" of more than $1.3 billion due under an agreement requiring it to cover payment shortfalls tied to a large CDO transaction.

Lehman said it had been "massively in the money" before its priority was wrongly taken away.

CIBC, in a statement, said it believes its obligations under the applicable contracts have been properly addressed, and that it intends to defend itself vigorously.

Several banks including Bank of America Corp, Bank of New York Mellon Corp, Deutsche Bank AG and US Bancorp are defendants in one or more of the latest lawsuits in their capacity as trustees.

The main case is In re: Lehman Brothers Holdings Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.

Reporting by Chelsea Emery and Jonathan Stempel in New York; Editing by Martha Graybow and Dave Zimmerman